What is the Equity Capital Market? The equity capital market is a subset of the broader capital market, where financial institutions and companies interact to trade financial instruments and raise capital for companies. Equity capital markets are riskier than debt markets and, thus, also provide potentially higher returns. Instruments Traded in the Equity Capital Market…
What is Standard and Poor’s (S&P)? Standard & Poor’s is an American financial intelligence company that operates as a division of S&P Global. S&P is a market leader in the provision of financial market analysis, particularly in the provision of benchmark and investable indices and credit ratings for companies and countries. The S&P Global division…
What is the Variable Cost Ratio? The variable cost ratio is a cost accounting tool used to express a company’s variable production costs as a percentage of its net sales. The ratio is calculated by dividing the variable costs by the net revenues of the company. The company’s net revenue includes the sum of its…
What is VantageScore? VantageScore is a credit rating service that caters directly to individual consumers. It is a credit rating product that was jointly developed by three credit rating bureaus, i.e., Equifax, Experian, and TransUnion. The product was created as an alternative to the FICO score, which was developed by the Fair Isaac Corporation. What…
What is a Variable Coupon Renewable Note (VCR)? A variable coupon renewable note (VCR) is a type of fixed-income security that is renewable. Its distinguishing characteristic is that the return, which is known as the variable coupon rate, is subject to periodic revisions. Other features of VCRs include embedded put options. What is Coupon Rate?…
What are Interest Tax Shields? The term “interest tax shield” refers to the reduced income taxes brought about by deductions to taxable income from a company’s interest expense. For instance, there are cases where mortgages may have an interest tax shield for buyers since the mortgage interest is deductible against income. One of the main…
What is Revolver Debt? Revolver debt, also known as revolving debt, is a form of credit that can be accessed by corporations and individuals. What separates revolving debt from regular installment loans, then? In a regular loan, the borrower is given access to a fixed sum of money that must then be amortized and paid…
Overview of LBO Buy-Side This article is specifically about LBOs on the buy-side of corporate finance. In a leveraged buyout (LBO), a private equity firm uses as much leverage as possible to acquire a business and maximize the internal rate of return (IRR) to equity investors. LBO buy-side entities include private equity firms, life insurance companies,…
